Top Reasons The #SocialEra Changes Everything

I'll admit it: I hate business books. Outside of the fact that most of my work focuses on making the world a better place, which often runs rather contrary to the profit-focused schemes of the business world, it's the--deep breath--buzzwords that really do me in. There's only so much "seamless leveraging of synergistic core competencies while maintaining brand integrity and mindshare in the value system of the new economy" that I can take before the urge to set the book on fire becomes too great, and I risk violating deeply-held principles I have about book-burning.

It is with great joy (and relief) that I can recommend a new business book out this month: 11 Rules for Creating Value in the #SocialEra by Nilofer Merchant (Harvard Business Review, Sept 2012). I met Merchant online earlier this year through common friends and entrepreneurship circles, and when she suggested that she send me a copy of her manuscript, I cringed with worry, fully aware of my business-book track record and easy access to matches and gasoline. I agreed, however, and am beyond grateful that I did: This is one of best books describing the deep shifts in how we operate in the world that I've read in years--probably the most radical and compelling since Clay Shirky's Here Comes Everybody.

We all know that, thanks to technology, everything about everything is changing. You can pick up a million other books to describe the surface of those changes, or to wax poetic on what the changes might/maybe/could possibly mean. But turn to Merchant for a powerful and clear breakdown of what the Social Era means now, and how best to take advantage of its benefits in the near and distant future. Merchant is at her best when she issues direct challenges to traditional business thinking; not content to simply criticize or offer armchair quarterbacking, she thoughtfully explains this integrative and purposeful moment we each have the capacity seize.

I had a chance to talk with Merchant this week about the deep shifts, how they affect social change and social justice work, and what the Social Era holds not just for the few, but for all of us.

DZ: We have lots of new technologies, but what should we be focusing on now?

Nilofer Merchant

NM: New technologies enable social exchanges – from news aggregator sites like Twitter, to crowdsourcing platforms for service like Get Satisfaction, or social networks like Yammer that allow sharing of information within an enterprise. No doubt, we’ll continue to see advances. And while any new technology can be interesting (of late, I’m fascinated by Pinterest!) they not actually the central idea: Each on its own is only an example of how value is created with others, allowing seemingly disparate individuals to create value in a way that once only centralized organizations could.

Now the question is, Why do we keep thinking about things in old ways? For example, why do we need to have all people inside one building to “collaborate?” Why do we insist on everyone having to come to work in a set spot each day when most of us are not most creative in that context? Why do we insist on thinking of work as that thing we do when we get a paycheck rather than that thing we do to create value? We should be focused on what is the best way to actually create value and optimizing for that, not some bogus 20th century way of looking like we’re creating value.

DZ: One of the passages that resonated most with me was where you say, "Connections create value. The social era will reward those organizations that realize they don't create value all by themselves." This principle is so hard for traditional business leaders, and non-profit leaders, too, to wrap their heads around. How do you convince the non-believers? Do you have a favorite story of someone who has seen the light?

NM: Let’s face it, non-believers are committed to their non-believer-ness. We might never change them. Or as Geoffrey Moore would say, laggards wait until there is no choice other than to act. Laggards are the ones still using fax machines instead of email.

Instead, let’s focus on those that want to use Social because they get that things have changed, but they are only using it as an add-on. You see, most organizations have been focused on tacking social elements onto their current operations. Social has been adopted programmatically, rather than strategically. Use a community here, consider doing a freemium strategy there, and then, of course, engage on Twitter. All that has done is get our old models to move a little faster, and they (and our organizations) are straining with the effort of maintaining that speed. It doesn’t allow them to actually be fast, fluid, and flexible even though that is what market conditions warrant.

I think of industries like banking. In the last 10 years, major financial tools have been created: for example, a Paypal – a simple form of online payments, Kickstarter to allow crowdfunding of projects, and Square which can make any one a merchant. The banking industry continues to ignore all these as “anomalies.” Instead of adapting to the changing landscape, a major bank, Bank of America, recently considered (then revoked) a wildly unpopular $5 fee for customers to get their own money via their debit card because they have to find a way to fund all those retail storefronts.

If you were creating a “bank” today, you would likely ask yourself how to accomplish the transactions (deposits, withdrawals, financial management) of banking without the physical commitment of banks. You wouldn’t try and do it all yourself; you would engage community. You might build on the idea as ING is doing with its café model providing a hub within a local geography. You might code mobile banking apps, like the companies transforming finance in Africa. You might even reimagine what it is to lend money -- and rather than fight peer-to-peer loan legislation, you might enable local and social lending, as offered by the Lending Club.

Have I seen some who have seen the light? Yes, and it is a wonderful thing. The key was that they were willing to reimagine who they were.

DZ: I can't help but think of the anniversary of Occupy Wall Street this week when I read portions of your book, like "Money, while necessary, motivates neither the best people, nor the best in people. Purpose does." Are we looking at a newer, kinder capitalism in the near future?

NM: Yepadoodle. We’ve been taught that we can do something meaningful (join a non-profit!) or making money (join Wall Street), and somehow these ideas sit in contrast with each other. But of course, we can see examples around us of amazing organizations who are doing good and making money.

Take Kickstarter for example, which is enabling scale of financing because of community. Just last weekend I invested in a company, called Everpurse, which seamlessly charges your phone when put back in the purse. I not only care about the product since it solves a problem– but I also care about seeing entrepreneurs who are women get their product into the world, since women typically receive less than 10% of all investment dollars. It’s more than a investing in a product, it’s a investing in a purpose. And in publically giving dollars, I am also sharing what I think is an important cause. Purpose and profits are not at odds; they never have been, but today we can see the direct linkage between the two.

DZ: Along those lines, what does the The Social Era mean for, to be blunt, poor people, or people who have previously been marginalized out of an economic system focused nearly exclusively in recent memory on exploitation of cheap labor? I see myself, and many of my colleagues, operating in the Social Era, but we're already endowed with a certain amount of privilege that allows us to create our own futures. How do those who previously haven't have this kind of access to power best take advantage of The Social Era?

NM: I believe that the Social Era allows those that have previously been “unseen” to be “seen”. Opportunities that were once vetted opportunities — limited to a select few — are now available to many.

“Crowdsourcing solutions often allow us to include voices and talent we've never heard before. One such "game," Fold It, allows any individual to work with sequencing amino acids to figure out how that protein is going to fold. This particular work is very important to research and medicine, and is usually conducted by scientists with PhDs. And in fact when this game was first being used, the creators of the program were thinking that maybe they could have MIT students in their spare time helping them. Or perhaps, scientists from around the world. But when Fold It studied who was the best protein folder in the world, it wasn't someone they "expected" to see. Instead, it was someone who is an executive assistant by day — a woman — and is the world's best scientific protein folder at night. This individual, driven by her own skills and passions, is not being assigned the work, nor being vetted to do the work, but is simply doing the work. The Social Era unlocks new doors of both who can contribute and what can be created, and thus changes the very source of power itself. “

Bias – that thing where people often look for patterns they’ve already seen -- often limits us to seeing only that which we expect to see. The Social Era can open up our aperture. And in doing so we let those that have largely been ignored – women, especially – to contribute to solving the many problems we have all around us. That will unlock our economic power. And just to be clear, it’s not that everyone will, but that anyone can. As we stop vetting people out, we’ll see talent come forward in ways we cannot see today.

DZ: Another interesting portion of the book that I found so compelling is the idea that focusing the business-consumer relationship away from transactions and towards commitment is shifting power. Can you talk about that a little? Follow-up: Could this also be applied to politics?

NM: Yes, I develop the idea in the book that we ought to turn to the construct of a relationship to think about marketing. Today, we use the language of war to talk about sales and marketing, as in: “targeting a customer” or “capturing market share”, or even “win a customer”. Even the very construct of what constitutes a business model, the sales and marketing step is considered the phase of “capturing revenue”.

Since the brilliant Cluetrain Manifesto was written, social marketing experts will tell you that marketing has to become more conversational, more relationship-oriented. While most companies have now learned how to say hello and how to apologize, I would argue that few have accepted the fact that power has shifted. Power has shifted from a company-centered worldview where it was responsible for figuring out what to create and telling the consumer (loudly and often if it had money to do so) what to buy, to a time when consumers can co-create with one another and with brands.

[Brands that don’t recognize the shift in power use the technological tools but don’t act social. Are the persistent tweets that always apologize but never fix the situation really social at all? (I’m looking at you, @united, @att, and @comcastcares.) If that’s a “relationship,” it’s a rather boorish one and one that most of us would abandon. In comparison Virgin America’s interactions are incredibly human. The other day I was tweeting back and forth with their @twitter handle and pointed out that a monitor was broken in a particular seat; in gratitude, they dropped $20 into my Virgin account. A small gesture but incredibly social in every way. You’d never see that from the United account.]

Social has never been a technology trend, as it is often depicted by the experts. Humans have always wanted to connect, organize, and create value. Back when there were tribes, people had community and naturally had relationships in the marketplace. But our current constructs have been focused on scale at the cost of connection. In truth, if we let it, marketing in the social era will look like any other relationship; perhaps like falling in love, following an arc of romance, struggle, commitment, and sometimes, co-creation. I elaborate on that at length in the book so I’ll leave it at that.

A hundred years from now, people are talking about the time we shifted out of the Industrial Age and into the Social Era. Someone brings up your book at a cocktail party. What's the big, lasting impression that holds up for our counterparts of the future? What do they take away from your work?

In the #SocialEra, we unlocked all human potential, and it changed everything. Not as some management after-thought, like frosting on a cupcake. No, social is used as a backbone in every part of the business, like a key ingredient that makes the cupcakes even bigger, and better. Profits don’t come at the cost of purpose; they come because of purpose. And not that everyone will add value, but anyone can. And they have.

I'm the co-founder and partner of Lux Digital in New York, and the author of "Share This! How You Will Change the World with Social Networking" (Berrett-Koehler, 2010). I'm a consultant to key media and advocacy organizations, and my clients have included The Ford Foundation...